good morning. boeing has reportedly found a way to fix battery problems with its grounded 787 dreamliner.

a judge says david einhorn's hedge fund may succeed in its legal attack against apple. and you've been hacked. major financial institutions, fast food joints, tech giants, and now car companies. corporate america facing a flurry of attacks. it's wednesday, february 20, 2013. new five-year high yesterday. "squawk box" begins right now. good morning, everybody. and welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. our guest host is business insider ceo henry blogett. from corporate hacking attacks to questions about dell's corporate buyout, this is a great day to have him on set. welcome. coming up next hour, a "squawk" ceo summit. we're tackling a question on everyone's mind -- how do we get the economy to grow from here? no one knows better than the leaders of corporate america. joining on set this morning, 32

adviser ceo robert wolfe. we'll have hanes celestial ceo irwin simon. and the kraft group president, jonathan kraft. on the lighter side of things, spring is around the corner. that must meantime for baseball. white sox vice president ken williams will join us to talk business on and off the diamond coming up at 8:40 eastern time. an interesting mix of topics in rotation today. first, let's get over to andrew with the top headlines. >> thanks. boeing reportedly found a way to fix battery problems with its grounded 787. here's what's happening. involves increasing the space between cells in the battery. a source tells reuters the gaps between the cells were why there was overheating. we'll talk about that in a bit. in other news on boeing, the company's engineers are split on a contract. the largest professional group approved the planemaker's latest contract offer. but members of a smaller technical union are rejecting it. both groups authorized the union to call a strike.

the groups negotiate together. but the contracts are separate. so talks are set now to resume. and no work stoppage is expected. at least in the near term. also in the news, the fbi says it's now looking into alleged insider trading in the options of heinz for its acquisition by berkshire hathaway and 3g capital. the sec filed suit against unknown traders who is said used an account in switzerland to trade on per ported -- purported inside knowledge of the transaction. and negotiators breaking down between res cap and allied financial. creditors pushing for a larger settle chmt is why the company is resisting. this makes it likely that the company will face litigation. also, toyota motors reportedly ramping up japanese output by 10% in april. the nikkei reporting that the automaker's planning an increase due to higher than expected sales and a weaker yen. joe? would you -- if you knew about a deal, is there any way that you would do anything? >> no, no.

>> with the e-mail trail -- >> i don't understand. i don't understand why anybody would try anymore. >> they have -- >> i can follow you in ten seconds. what i find actually crazier about the situation is that the sec is looking into this, the fbi is looking into it. but goldman sachs which is where the trades went through hasn't released the names, and i'm not sure has to. and why that would be. there's a whole secondary -- >> they don't have to? >> i don't believe -- we can talk about it. my sung they haven't been subpoenaed so they don't have to do it voluntary. >> maybe it's a death wish or prison wish. i'm not going to go into what that could involve. i mean, you have to want to go -- you're going, right? it's afternoon -- if you know about the deal and you buy something to benefit from when the deal is announced, you're doing to jail, right? >> what if you hear about it? the scuttle butt, trading -- >> is it -- >> you know, here's -- we'll talk to him in a second. in other news this morning, bank of america ceo brian

moynihan was awarded a 73% pay increase in 2012 to $12.1 million. and if you do the math, i don't know how you'd do. you have to do algebra. that would be $7 million last year. so add 71% on to that and get the 12. bigger stock grant is how it happened. his base salary for 2013 is also due to rise by more than 55% which is a good number for any of us. >> great. >> isn't it? >> it is. >> if you could get 55%, you'd set for that, wouldn't you? >> absolutely. >> okay. an $11 billion-plus sale of life technologies is reporting -- reportedly looking less likely this morning. potential buyer, thermal fisher scientific. said to be skeptical about a deal due to a gap in the price expectations with the company. meantime, buyout vaufrs come up short. and a u.s. judge says that bp recovered 810,000 of barrels of oil from its 2010 gulf of

mexico spill site. the judge ruled that this amount should be excluded from certain penalties that the company may face, cutting its maximum fine by as much as $3.5 billion. a spill-related civil trial as we've been reporting this week is due to start next week in new orleans. at the top of the show, you said something that made me think of ground hog day. you said markets at a new five--year high. >> i said new -- i don't like to say fresh. and you really don't need to say new five-year high -- >> five-year high -- >> but i see it every. where i saw -- >> we say it every day, too. seems like we've been in this position. five-year high. five-year high. ♪ >> we're not that far from a new high. >> a real new high. >> hopefully. how many people -- remember yesterday, how many people said, no, this can't go much -- we've got to have a correction. and you know, a lot of times that's a lonesome cry after a

while about the correction and they capitulate. we'll see. so far, so good. >> it has been stubborn. 12-year high for the nasdaq, too. we'll take you through the stocks to watch, some big movers. first up, shares of netspend rising after hours. this is the prepaid debit card provider. it's being acquired by payment processor total systems services for $16 a share or about $1.4 billion. it was actually up after hours yesterday. a different foyer for millennia -- story for millennia media. the revenue missed the market and guns looked weak. all of these starts are wrong. i'm not sure why we haven't fixed them yet. this stock was down after hours, as well. and demand media shares getting a pop after better than expected earnings in revenues. the company says that it's exploring splitting its media and domain businesses. la-z-boy beating the street and shares rose after hours on the news. right here you see 15.46. and acena earnings beating the street. that stock was up in the after

hours. not down 4.5% as this chart says. and rambis announcing it's signed a patent license agreement with lsi corporation. rambis offering upbeat revenue guidance. and we'll get the charts fixed. we've let the tech people know, and it hasn't been fixed yet. back to you. the price on the left and the price on the right on the chart were both wrong. they were much higher or lower -- >> we told the i.t. people about this last week. didn't get fixed. >> takes time. we'll get. it. let's check on the markets. as we said, another good day yesterday. this morning we'll see whether we can consolidate gains or head higher. we don't know yet. those are all treading water moves today between now and 9:30. we'll see whether we get more definitive look at where we're headed. oil, to me, it just -- you add everything up, you have oil

this high and other economic numbers which -- >> gold? >> in gold and -- >> down another $10 this morning. >> it doesn't -- i don't know. it makes -- >> already at a low. >> we're not that far from 8% unemployment. you've got the payroll tax -- >> and sequester coming. >> and i know rich people only put the money in the bank and don't spend it, but there are significant tax increases, not just the payroll tax, but people at 400 and above, they're part of the economy. they're getting whacked with the obama care and the deal that was arrived at. all of these things -- >> austerity is ugly. getting there. >> so is oil -- oil's not supposed to go up when the economy's slowing. >> you have the central banks that are printing money. >> you do. >> it's got to go up. >> think about what would happen if they weren't. and in -- all bets off on what happens with the ten year now, too. if we're in a slowing environment. gold suddenliy -- we're immediately going back to 2.75 or 3%. and the dollar's been something

to behold in terms of the yen. you don't see that often. and especially when it's telegraphed by --not the guy with the hair, the guy named after lincoln, right? abe. >> abe? >> is it abe? >> or abe. >> i know it. lincoln is hot. >> abe to me. >> lincoln is hot. >> you think it's going to win? >> there's a movie every day. there's that and the o'reillys killing lincoln and "lincoln: the vampire hunter." >> i read the book. >> but? >> i did. >> you had that much time? >> i office a plane. i tried on a plane. >> that's okay. did they have bathrooms on the plane or bottles? [ flushing ] >> funny. he knows what you're talking about. >> i know he. does memorialized for all time. >> i don't think the -- >> i blame him. we don't need to tell the audience at this point. look up "business insider." you were talking about your

brothers. >> only the boys. >> it was only the boys -- of course. >> little boys. trying to drive 12 hours across -- >> little boys with little wee-wees. it would be easy in the bottle. let's look -- >> this squawk-ward moment has been brought to you by joe kerner. >> ha, ha, you're it. the gold board -- it was her yesterday that blurted that out. where is gold? down again. >> it's down another $10 -- >> under 1,600 now. hit a boump that -- >> yesterday was already at its weakest level. >> the charts, lower lows, lower highs. a bumpy ride on the way to the guaranteed 2,000 which every single gold bug talked about. >> a death cross. >> it is! >> new technical chart where people are freaking about. you got me. where could it go? it could go anywhere. yellow metal. >> it was 200. buffett points out you could fit all the gold in the world on a football field.

>> 40 by 40 square. >> then what do you do? nothing. give me cattle. give me pigs. give me broilers. give me anything. give me guns, the -- to steal the gold. whatever. >> pretty much. >> all right. okay. it's also time for the global markets report. we'll fly over to kelly evans. she may be able to save us a little bit. standing by in london. miss evans, good morning to you. >> andrew, good morning. it's the bank of england that's moving markets today. the federal reserve minutes later today are sure to be the focus of the u.s. session. over here, the action's started. the sterling/dollar behind me, down .8%. we did fall below the 154 level. guys, we've been flirting with 153, below 153 in the last couple of minutes, as well. the first time we've been at these levels since last july. more significantly it comes as the bank of england saw governor king who's leaving outvoted with others on wanting to increase the size of the quantitative easing program. don't expect that they're sort of shedding any tears over the strong market reaction today

when those minutes pass. the bank of england saying the weaker sterling is good for growth. a lot of britains tonight agree as they look at a continuing rob of their discretionary purchasing power. that story is something not just britain is dealing with for the time being. what it is doing, if we can flip over to the market reaction for stocks, is helping bolster the ftse. so after hitting the five-year highs, now punching above the 6,400 level for the first time since 2008. so adding about .4% today. five-year high is similar story to what we're seeing with the s&p 500. it's mixed trade for the rest of the markets. but as we head back over to you guys, it's going to be an something question now for the federal reserve in the u.s. as the bank of england now comes out, weakens the -- sterling by -- by almost 1% today, we've got new zealand talking currency down, we've got korea talking its currency down. you mentioned what's been happening in japan. suddenly the u.s. dollar starts to look like one of the stronger men by comparison. on that note of currency wars

around, what, 25 at this point, back to you. >> thank you. in other news, a judge says david einhorn's hedge fund has shown "a likelihood of success" if his legal attack against apple goes forward. the judge made no immediate ruling to block a shareholder vote on a proxy -- i need to apologize to becky quick. we were talking about this last night -- on the show yesterday and by e-mail. >> i should have read. i didn't -- >> no, you were right. in the complaint, the suggestion is not that apple can never issue a preferred share. it's just that it would require a shareholder vote. what does that mean? >> that strikes me as odd. you would think more shareholder say -- >> would be a better thing. then there's some other -- some think it's a bad thing because it means the board can't unilateral dee it and therefore can't make the decision. >> and other chershareholders w never vote for a better deal? >> we can talk to our guest host about it.

we've introduced -- you've been talking. i don't know if you need an introduction. henry blodgett, business insider ceo and editor-in-chief. do you have -- >> i think his idea is financial engineering. we had had a back and forth. he's much more sophisticated about this than most people. he persuasively argues that one plus one might equal a little more than two if you get a big block of referred in there. in terms of complexity, everything else. >> the thing with the case, though? >> in terms of what he's asking for? >> yeah. i think basically what's going on here is he wants a pulpit. he want to bag his finger at apple management and say, look, you've got $140 billion on the balance sheet. start giving it to me. i own you. do something with it. >> do you think he's going to could? >> i think he's going succeed in forcing apple to do something with the cash. i think issuing a preferred -- i don't think it makes sense. i think there are plenty of other ways to get the cash back to shareholders. you could use debt if you wanted to, you could increase the

dividend. he could exploit the difference where a prefer sudden trading and common is trading. the idea you that could create security and stick it in there without disadvantaging the common stock shareholders doesn't make sense. >> right. >> you're putting yourself ahead of everybody -- >> if the shareholders will vote, they're never going to vote somebody else having a better position than they have themselves. >> that's -- that's right. a lot of shareholders, they say increase the dividend. >> right. give back -- although i did read something that the judge in this case had already said. he thinks einhorn might be in a position to win. i don't understand the legal -- >> i think that's the technicality of this particular lawsuit which is all around can apple outlaw the issuance of a preferred. it doesn't force them to do that -- >> i'm making it more -- it's not just about whether they can outlaw it. it's whether they can put it as part of -- >> the proxy? >> the proxy. they've combined it into a vote that includes other issues. so what he's fighting for is for it to be separated out. so that shareholders would vote for it separately. we're -- it's down --

>> we've got to put it in another bill. >> right. >> let's -- joe was joking, and you -- i don't know if you were joking or not, insider trading. >> i understand what he's saying. >> on this issue of heinz, we have what appears to be some form of trading ahead of the situation with these options. >> which by the way there almost always. is somebody knows -- >> why does it happen in this day and age? we're inundated every day with reports of somebody going to jail, getting arrested, doing something for the exact same thing. is there no deterrent effect? >> first of all, it's good that the sec is acting this quickly. and it just happened in the merger last week that was announced. >> why don't they know who they are, by the way? >> they will. >> why shouldn't -- >> why shouldn't you know who they are is what you're asking? >> yes. >> it will come out, no question. look, so it's very good. that will deter it. if it happens the next morning, as it's happening. pictures -- it's become obvious

to people. something happens on the trader floor, what's going on, rumor. wow. there's this big deal going down. i'll take a play on that. >> it's different when you hear someone has to light the match to begin -- >> no, you can play it. if the rumor's going around and you think you got tellery -- >> no, the question is how did the rumor emerge? >> any trader on the trading floor hears scuttlebutt. people hear things all the time. there are lots of companies out there that are prime acquisition targets. everybody's got on the screen, somebody must know something. a rumor starts. >> i hear stuff usually from some form of insider. >> maybe somebody heard something with regard to a banker, some banker was going that city. putting two and two together. making a good bet. not based on actual knowledge but a bet that a lot of people follow that. they cash in, suddenly there's the huge action in the options. sec's right to look at it. they can put people other oath. people want to testify -- here's what i saw, what i did.

the evidence that people are trading ahead of the deal is not evidence that they knew it was going happen. they figured it out. >> let me throw one other piece of news -- >> the -- at the monsanto -- >> i used to track plans. you can't do it anymore. very hard to track plans. >> get out on a moped and follow sir larns wiwrence wildman -- >> i believe that's legal as long as you're not tapping lines. >> it eerie. >> dell, they had earnings. i don't think new england care good the earnings, they --in cared about the earnings, they cared about the buyout. >> i think it's sad and public shareholders take a longer term view is the only reason this company is going private is because michael dell and silverlake think that they can create a huge amount of value by doing that. there's going to be a big dividend where they pay themselves a huge mont off the top. what's sad is why can't they do

it now with public share orlando. >> are public shareholders willing to suffer through whatever the transition period is, does it allow activists and others to try to kick people out from the board? i mean, there is a legitimate argument to be made, doing it in private. some people would say a legitimate argument, doing private makes it easier. you're not having to deal with the stock falling when something bad happens. activists trying to come in to ruin your plan. >> it makes it easier. there's no question. but michael dell needs cohones to say this is the right plan for the company. i am going to execute it, it's going to take three years. if you want, you don't disagree, sell the stock or try to get me fired. this is what we are going to do. jeff bethesdas on did that at -- jeff bezos did that at amazon. people were screaming for seven years, you'll never make money, it won't work. you shouldn't be investing so much. look where it is. >> we've got to take a break. will michael dell be successful three years from now is. >> i think the deal will be very

successful. they will come out very much ahead. i think they will refloat it at the top -- >> shareholders will feel bad they let it happen to begin with. >> yes. >> there you go. >> you know that is a vulgar word -- >> crude? >> cajones. it's vulgar in spanish. like testicles here is not vulgar, it's -- cajones is not -- >> this squawk-ward moment is brought to you by joe kernen. >> like guts? >> no. bertha's mother here sings, you know -- spanish, you know, it's -- if you speak spanish, you would be better to say testicles. >> okay. >> all right. >> from here on out. coming up, if you have the caj cajones to do it. . before the bell, housing starts and the producer price index. this afternoon, minutes from the last rfmc meeting. we'll talk expectations and more

for the bull market run. >> every time i move i'm in your shot. sorry. trying to get out. >> people like that better probably. for when the bull market run, we'll see how long it continues. [ male announcer ] any technology not moving forward

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welcome back. u.s. equities futures. we'll look at how things are setting up the day. there you have.

a mixed picture. almost across the board -- i think that's probably the best way to say it. let's talk about the headlines taking place this morning. stanford university has set a new record in college fundraising. it's the first school to collect more than $1 billion in a single year. a new survey finds 3,500 u.s. colleges and universities raised $31 billion in fiscal 2012. that's 2.2% mrnt previous year. becky? let's get the national weather forecast from the weather channel's eric fisher. eric, good morning. >> good morning to everybody there. cold weather back on the minds of many here into the northeast. feels very much like the dead of winter. windchill of four here in buffalo. in the city, 20 degrees the windchill. boston, 27. the winds howling, temperatures dropping. yes, more snow falling out there, especially around the lakes today. south of buffalo, that's where it will be focused and into northern maine. good news for the skiers. most of this last storm stayed mostly snow. the slopes are still in good shape. totals today mostly north of

syracuse toward the tughill plateau, 94 staying breezy and dry. most of the concern over the next couple of days will be the latest winter storm. moving into the west today, snow overspreading the four corners area. colorado into new mexico, arizona, utah, all picking up significant snow. this really cranks into the day tomorrow. we'll have heavy snow across nebraska, kansas, missouri, into iowa. big area of sleet and freezing rain here across southern missouri and northern arkansas. travel is going to be really rough. for some folks with enough freezing rain, we could be talking power outages for several days. especially in northern arkansas. that's something to watch. and then on friday, the snow moves up toward the great lakes. the icy mix heads toward pittsburgh, and cleveland could be looking at some of that, as well. winter storm warnings, bull's eye in the middle of the country. most of the state of kansas and missouri under warnings. then you see the ice storm just off toward the south. storm totals could see two feet here in kansas, foot and a half west of omaha. the ice further to the south.

winter not done yet. >> no, it's not. >> good. it's february. i'm a fan. i see the band's extending into colorado there, eric, my buddy, right? >> yeah. i would pick the san juans. if you're a skier, head toward durango, telluride. that will be the spot. >> all right. it's all okay now. they've been getting snow almost every night. a lot of the places. you know, the base still isn't what it could be, but much better than last year. anybody that's -- >> yeah, about 80% of snow pack. we're just a little on the short end. but this should definitely help the situation. >> okay. great. all right. thanks. we did see the market yesterday after, remember, the three-day weekend. people wondering what happens. and it opened higher. and the stocks hit multi-year highs. joining us now, mark activivitn managing director and center economist at wells fargo. and then david joy, chief market strategist at ameriprize

financial. we kept hearing that it's a stretch, we've heard it for months. that is that the complicate backdrop doesn't -- the economic backdrop doesn't justify the changes. maybe it's the fed, maybe it's discounting good news into the future. at this point, the market seems to be ahead of itself. do you believe that or not? >> i think on a valuation basis, i would say no. i think stocks are okay where they are, sort of fair value. i think it's driven primarily by the fed. in other words, if the fed wasn't there doing what they're doing, stocks would be nowhere near where they are in my opinion. >> does it matter why? >> does it matter why? not for the next couple of years. i expect them to continue to do what they've been doing. so whether it's sort of an artificially inflated environment, to me that's okay. you can still make money. so watch what the fed does. and what they say. those minutes are going to be important today. i do think at the same time we're still likely to get a correction in the weeks, maybe the months ahead. i think as you point out, the

economic fundamentals matter on some level. and the economy's going to be slowing down. the cumulative impact of the payroll tax increase, the income tax increase, higher gasoline prices and sequester cuts is all going to converge and result in a very weak print, i think, for maybe the second quarter gdp. i think the market pulls back a little and maybe once we get beyond some of the political uncertainty, the second half looks better. >> housing's better. the fur or five things you mentioned, do they more than offset the improvement we've seen in the economy? that we have finally seen, that we've waited center. >> i think they will in the short run. i think they will trump them. and we'll pull back. but i think the move in housing is sustainable. i mean, just -- in terms -- >> that's a lot. it covers a -- people feel much better about their job, about everything when they feel like, you know, they're -- what is that? >> you are correct. i'm saying, yes. >> you don't worry -- you're not -- that house you got, and by the way, folks, you can find it

on -- >> what is going on? >> remember, it's beautiful, though. >> it is. >> incredible. you know, it -- put two together, right, knocking out walls -- >> didn't knock out walls. we'll get to mark vittner. you're an engine of the economy. we need it. mark, you just heard all that stuff. do we get above 8% again in unemployment? >> i think that we're probably headed lower in the unemployment rate. it's a bit of a mystery because did t depends on if people come -- it depends on if people come back in the labor force in large numbers. i'm not sure that's going to happen. i think that given how much -- how much support payments we have, the big rise in disability payments and food stamps, we have a higher reservation wage. a required wage that we need to -- that jobs need to be producing in order to bring people back in the work force. we're just not there. we'll see modest growth. i think we'll be in the neighborhood of 2%. i'm not as worried about the

sequester. i think the economy's actually on firmer footing than -- than is widely thought. and that the day when the fed begins to wind down q.e. is probably closer than people think. >> mark, you just said that you think we need a higher wage because people won't work for the wage that's there now, you think. is that an argument for coming up with higher minimum wage because otherwise people won't go back to work? >> no. i don't think it justifies the minimum wage. the minimum wage affects people at the least skilled level. and they really -- the problem with raising the minimum wage is you make it much harder for low skilled workers to gets the first job. that's where they get the skills to earn a higher income. so we've been preventing a lot of young people from getting jobs. that's where we've seen the biggest drop in labor force participation has been among the 16 to 24-year-old. i think the -- the increase in the minimum wage we did back in 2008 did a lot of damage to the economy. and i think that we're still paying for that. that's one of the reasons that

so many young people are having trouble finding jobs today. >> but what -- what but say? i misunderstood that -- >> i think in terms of labor force participation and other parts of the economy, there's just not a -- not a high enough wage being offered in the economy today. we're not creating enough high-wage jobs to bring in -- to bring women back into the work force who said, you know what, it's -- it doesn't make as much sense for me to take a job now when i factor in the cost of childcare. >> right. >> or someone who lost their job and has unemployment. >> what you're saying, too, is that, you know, with disability and unemployment insurance and everything else, you can make about $29,000 or $30,000. can't you? >> yeah. it -- it varies by state. and you look at a state like california and the labor force participation right which had been in line with the nation has dropped more than a percentage point below it because california's a high-cost state. it takes a lot to entice people back into the work force in california. >> right. >> there the number may number the high 30s. we're just not creating enough

of those high-paving jobs to bring people back in the labor force. >> i think the question joe's asking, if i'm wrong, are we talking about trying to find those jobs and raise -- and raise incomes, or are we trying to take away -- >> the benefits -- >> whatever those benefits are. >> unemployment has to end. >> the unemployment -- some unemployment issues, unemployment benefits which are potentially creating a disincentive to work. >> well, we really don't have as much control over creating the jobs. that happens in the private sector. but we dpreebl ne-- we probablyo need to roll back the assistance programs. we're doing that in north carolina. there's been a big reform to the unemployment insurance program that the governor signed that reduces the number of weeks that people can collect unemployment and the maximum manhunt that you can receive. >> what scares -- maximum amount that you can receive. >> what scares subcommittee -- we've run four, five straight years of a trillion. and we're afraid to tax cut $85

billion which -- we're afraid to cut $85 billion which means we're at trillion. for the future if we don't get better growth and tax revenues from the structure we have, we're stuck -- we're at $915 billion even with the sequester. that's all we can cut? >> yeah. and particularly when we just spent 60 or -- >> on sandy -- >> $60 billion for sandy. so on net basis, we're not having this huge cut in government spending. >> you don't want to. >> no, no, neither of you mentioned it, sequester. week and a half we're going to start shopping the -- >> that's out of a trillion that they're chopping -- >> the white house came out yesterday and said it's going to be disastrous. >> i know. >> i think it slows the economy down. i also think that there was this mindset out there that if this is the only way we'll get cuts -- >> right, $85 billion. >> so continue. and in the long run that might be good for investor settlement. >> is it a too ugly way to do it? boehner called it in the "wall street journal" this morning, he

says it's an ugly way to do it. >> it is. it is. if that's the only way you get it done, do it. >> you're okay with that? you would prefer to see it? >> i'm okay because i don't work in the defense industry. i don't work in some of the places that are going to be affected. but i think as a shareholder -- >> as somebody watching the markets -- >> yeah. i think it's a good thing for the markets in the long run. >> another big date at the end of march. government appropriations run out. they could shut the government down. >> the continuing resolution kicks in. >> right. >> what happens then? >> my worst case scenario is that the sequester languishes into the middle of the summer and then they couple it again with the debt ceiling debate. and we see a repeat of what happened in august of 11. another -- you know, traumatic experience for the markets. >> david joy, thank you, mark vittner, thank you, as well. when we come back, the white house plans to strike back against china's cyber-attacks today. a number of companies discovering that their twitter accounts have been hacked. we'll have the details after this. first, as we head to a

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welcome back. today the obama administration is planning trade actions against countries caught at cyberespionage. today's announcement comes after a u.s. cybersecurity firm released details yesterday tying a secret chinese military unit to years of cyber-attacks against u.s. companies. other major u.s. corporations have reported being the target of hackers. chrysler said some hacked into the company saying the move was similar to an incident involving burger king on the same day. meantime, apple says a small number of macs at its offices were infected by malicious software. that attack was apparently similar to one that facebook acknowledged last week. so this is becoming an issue. we talked about "the new york times" was hacked about a month ago or two months ago. i don't -- i hope my -- >> the twitter stuff to me seems like it's not as much of a big deal. our guest shoeft henry blodgett

is business insider ceo and editor-in-chief. the china stuff seems like a big deal. >> very serious. very serious. it's basically an act of war. >> yeah. >> especially if it is tied to the army and government, it's an act of war. countries and corporations, the assets are now in data bases. they used to be in the ground, on land and so forth. this is the new way to wage war. and the white house responds. our government response is going to be very important. >> the white house already president obama i think has tried to appeal directly to the president of china and has gotten nowhere with it. i don't understand how we continue to have normal relations while this is going on in the back. >> that's right. and there's still some question as to whether this is in fact happened, some cybersecurity experts saying you can't con cloud that yet. we have to look at other thing. that's part of the process. i think there has to be a strong stand taken. we can't have this happen to our companies. >> what would be a strong stand in what's -- >> i don't know. trade is interesting. >> i don't either. >> the economies are incredibly entwined. you can't bring military into

it. >> right. >> you know, one of the things we haven't heard yet is that e-mail being hacked on like a gmail kind of service or hotmail kind of service or yahoo! service. do you believe at that hack vs. happened and we're not being told? one of the things i wonder is if -- if there was an announcement that some massive e-mail service was actually hacked, would everybody leave? what would happen? >> they've been hacked through the front end. in other words, duping you into giving up your password. then they go in through your account, change the password, take control. that's the way some of the famous hacks have happened. on the back end, not that we know. that would scare people. no question if you got into the entire gmail data base. >> where do you go? you have a "new york times" account. you've already been hacked. >> i wonder -- i assume between gmail, aol, yahoo!, they probably own 50, 60, 70% of the e-mail world. where you do go? i don't know. >> the same for corporations,

though. the data lives a server somewhere. there's no foolproof way of blocking access to it. it's not like you're protected if you say, i'm not going to use one of those cloud things. >> right. >> interesting. >> and if you want to know more about this and kind of a lighthearted way, see identify brought to you --eey thief" brought you to by universal studios. great movie -- >> a universal film? >> i didn't know it was a universal film did. you see it? >> i did not see it. if you have an interest, visit your -- check your local listings. >> by the parent company of comcast. >> i didn't put two and two together there. it's -- >> i was trying to -- more disclosure than anything. >> all right. coming up, victor -- it's not hard to do this, is it? not hard to be a family. >> synergistic. coming up, a visitor blows in from the windy city. michael gerka joins us on set with a look at what is most likely to drive today's action. [ male announcer ] i've seen incredible things.

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welcome back, michael gerka joins us, managing director at chicago-based spectrum asset management. and periods, michael, in the past where, say, you're not interested in the -- say you want to diversify. commodities are always interesting. so at this point, you mention -- i didn't know this. both wheat and corn, i remember the historic rallies we saw last year. they've pulled back by $2. >> through the levels that we rallied -- >> wheat and corn both. >> yes. we've retraced back from the

levels. a lot of people don't look at drought conditions in the winter. but especially in chicago scenarios where we didn't get any snow, over an inch, for 3 0 days. you're -- 360 days. you're looking at the midwest that hurting on the winter wheat scenario. if you look at the forward contracts being july where the anticipation of where the summer crops are going to be, they're getting ridiculously cheap in the market in a lot of options players looking at upside calls because they think because of those fundamental reasons you'll start seeing the grain markets rally back. >> why the pullback, though? >> that's just it. why is crude rallying in the face of fundamental reasons that the economy looks like it's really slowing down? that's a real misnomer. for the same reasons that crude makes no sense to be rallying other than a squeeze, we're seeing the same scenario. the anticipation was that we started getting precipitation, and it was coming into the market and didn't happen. and more and more of a squeeze started happening. >> you can either buy futures on wheat and corn or could be

fancier and buy, what, july calls? >> if you like the options markets, those are getting cheaper by the day. wheat, corn, soybeans have been trading. wheat's been the focus in the market from liquidity reasons -- >> is there reason to think that yields aren't going to be what people expect this year? >> exactly. exactly. if you kind of go a little step further into the softs market, you started seeing like orange juice and coffee having drought conditions or harvesting problems. those are much more volatile and less liquid markets. that's why we like talking about them. >> okay. the other thing that is on people's radar in commodities is gold's down under 1,600. what, platinum hitting new highs? >> going the opposite way. >> that's never happened -- >> a minor strike in south africa. the demand has been -- >> major strike with the miners. not a minor, a big strike with miners. >> yes, in south africa. then you had the implementation

of car and emissions from europe which is now obviously adding to more -- >> supply strapped and demand is up. >> yes. platinum almost ready to test 1,700 as gold goes up. gold was always trading above platinum. now they're almost $100 premium to the other. and actual diverging even further as that spread widens. no one trades that as a cross, but it's a very good reference that you see sometimes like with the brent versus the wti. >> you can buy gold and short platinum, you could do a spread or -- >> that's been a successful trade to be short one and the other. the problem is, they're not industrial versus precious metals. they're kind of in the same basket. you normally would never see this. so from historic per specktivities, this is some -- perspectives, this is something new and different. >> what about gold? >> two months ago everyone was sure gold was going to 2,000, then 3,000, 5,000, you couldn't lose. now it's breaking down. does it go back to 500? >> no. it's never going to lose that partisanship because of where we

sit with -- that purpose because wherever we sit with low rates. the idea was that we would have an inflation scenario and everyone would need more of gold as a hedge. look at the ten-year yield as an example. i mean, inflation's not rearing its head. the aspects of maybe it showing up is going to move interest rates. but the inflation scenario has gone out the window. for those reasons, gold is probably still overpriced. >> watch silver. >> silver's always been the, you know, for me, the precursor. we watched silver first because it's -- it's just as liquid, but it's got more of a -- an industrial -- >> where is silver? down under 30? >> it's below 30. there's a correction a lot of people targeted around 27 where you see value come in and players start -- right now at least let's say there's more fundamental reasons to get long silver on the dip than gold. >> all than there is gold. michael, thank you. i want to diversify. >> you can see i'm interested in that. comment, you can't have your

eggs all-in-one basket. eggs are a commodity. >> yes, they are. and they trade. so does milk. when we come back, we get henry blodgett, the last story of the hour. then a "squawk" summit, three corporate leaders with a message to washington and wall street, time to get the economy growing. 32 advisors. at farmers, we make you smarter about insurance. because what you don't know can hurt you. what if you didn't know that weeping willows have invasive roots? what if you didn't know that a trampoline... could affect your liability? and what if you didn't know that most cars... get broken into when the weather warms up? here, buddy. the more you know, the better you can plan for what's ahead. get smarter about your insurance. ♪ we are farmers bum - pa -dum, bum - bum - bum - bum ♪

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welcome back everybody. our guest host this hour is henry blodgett. we're trying to figure out the one big story everyone needs to pay attention to. sequester is just around the corner and yet the markets keep touching high levels. >> the next three months the government has the chance to screw everything up. the first is the sequester. the next is end of march, they have to vote for something for the government to operate again. in may, we get the debt ceiling again. >> does the market not think the debt ceiling is going to happen or not care. >> i think the consensus now is it will happen. then there will be a scramble in the middle of march to look like heroes, increase spend ac little bit, come to a deal and get us

through it. >> guys say don't fear the sequester. ceo market soothsayers say don't fear the sequester. >> i heard other ceos said you should fear it and cuts defense and other ripples. >> we had others. >> i guess when you're talking long term versus short term, there's the difference. >> it will reduce spending in the near term. the economy is weak, won't help. we need a long plan. keep everything going this year, a couple more out-years things are better, unemployment down, then we start to scale back. >> we've been hearing that. >> what are we going to scale back on. you look at furloughing employees at the faa who will be at the airports, that's nerve racking. >> same in defense. >> probably cuts no matter where they come. >> they will happen any way. >> you have the fringe on both

sides. howard dean thinks it's the right way because you will never get defense if you don't do it this way. >> then we have to come to some sort of agreement to fund the government. >> i think they backed off on it at this point. >> so everything's great? >> not everything is great but i think businesses are like -- so used to this, i'm not even -- >> that is true. the mood definitely is improving. new optimism. >> do whatever you have to do. coming up, we have an executive who says he has a solution for keeping america great, follow the money. the president's favorite banker, robert wolf.

opportunity knocking.

the dow s&p at nearly 5 1/2 year highs while the nasdaq closes at a 12 year high. we'll talk market optimism and where to make money with former c br cbs ceo robert wolf. >> good things come in small packages. >> why names like car technologies may be worth a look. we kick into high gear. >> a look at the emy close look at what will drive growth this year and companies taking advantage. as our second hour of "squawk" starts right now. >> good morning. welcome back to "squawk box," everybody. i'm becky quick along with joe kernen and andrew ross sorkin. keep a look at futures. they're barely bulging. the dow and s&p 500 both

near 5 1/2 year highs. nasdaq another 12 year high. keeping a close eye at what's happening. let's look at headlines. the dow component is close to a fix for the battery problem that has grounded its 787 dreamliner. reuters says the solution involves expanding space between battery cells overheating. and the air in the pond airways, 787 recovered an improperly wired battery. you would think it would help the stock but so far trading slowly. >> david einhorn might be close to winning his battle with apple. a judge has not issued an immediate ruling and he has a proposal to make it more difficult for apple to issue preferred shares. new jersey's newest casino will file for bankruptcy less than a

year after it opened. the rebel casino plans to do a pre-packaged bankruptcy next month that will cut its debt by two-thirds. it has been short of expectations and posted its second worst month in january. >> thanks. sony expected to showcase a new playstation console today in a preemptive strike against microsoft and xbox. the event in new york comes against industry speculation microsoft is set to unveil the successor to the xbox 360. sony purchased a cloud-based gaming company last summer and experts say that's a hint it will pursue a streaming strategy similar to microsoft. i think that's what you have to do to compete. sony may offer an expanded offer of free games to counter a threat of what they're calling casual gaming. i don't know. >> online stuff that you -- >> like zynga?

>> words with friends. >> alec baldwin. he is a hot head. >> yesterday, he quit twitter again. >> he's like -- i think they would be out of business if they didn't have an alec baldwin story every week. and this home builder down as stocks down for toll brothers. net income was $4.4 million or three cents a share reversing a loss of $2.8 million or 2 cents a share earlier. the revenue this year rose 31%. our next guest host for the next two hours is banking on america as source of growth, robert wolf, ceo of 32 advisors and former ceo of ubs america. we want to talk about the business of your new entity, your new company and how it's going. now, you've got clients and you

need to tell them what to do. >> i hear you. >> so where are we? what do we do? where's the economy? what's likely to happen and what about markets? >> let me give the 32nd 32 advisors. we are looking at gaps in this country, exports percent of gdp is 15% and all industrialized countries are north of 25 and 30% and germany at 50. we will help international trade finance. we brought on kevin barney who was at the export import bank. the second is inbound investment, very similar. before 2001, foreign voechlt into this country it was 30% of gdp for foreign investment. it is 15% because of investment, l labor -- >> when was it? >> before sep 11.

now we hired barry jones, select usa don't select other companies, select us. we will help other countries come build, buy and invest. the third stream is austan goolsbee's economic intelligence stream where we think the economists today know cpi inflation but don't know the interrogation between public policy and economics. we think austin knows that better than any. we actually started his first call last week. >> can you talk about his call? >> sure. happy to. >> i can tell you. before 32 advisors, we never really paid him or hired him but he gave us a lot of insight over the last two years. >> and now doing it on private conference calls. >> he was gloomy when other people weren't and he was always right. >> two more an i'm done. we have our restructuring stream by floyd taylor part of the

algron group, everything is being restructured today. and communications, helping firms foreign and domestics on press branding and those times of things. now to austin. >> he's gloomier. >> for a guy who's very peppy and funny, he was awfully gloomy. this was a 90 minute call. you know it went well because not one client got off the call. it's a weekly call we have and like a membership only. >> you don't wear one of those jackets? >> no. i used to wear one, had a white one. >> you wore it when it was cool. in the '70s. >> any who wears one now isn't anything except a nerd. >> i can't even wear my football jacket municipal. nothing fits. the premise was sequestration is bad. continue i continuing resolution, bad. >> sequestration, all these things are happening and bad.

>> he thinks continuing resolution. >> the thinks there will be a government shutdown, north of 50% unless something happens in the next 30 days no one's been talking about. even the minimum wage, he was debating how that can impact employment for the low end. >> he said it could hurt employment, right? andrew, if paul krugman tells you a dog is a cat and keeps saying it, no, it's a dog and you hear it meowing, do we have to believe him because of his nobel prize? is that where we are? >> saying what? >> there's a cat meowing. >> on anything -- >> on minimum raise, raise it to $50 an hour, a great thing. >> paul krugman believes we can take on more debt -- >> says raising the minimum wage does not hurt. >> paul is on the consumer side. he's saying 70% of the country is consumer driven. >> raise the minimum wage, comes back to the economy.

>> on the employment side, austin will say for those people making minimum wage, a d disproportionate amount of our employees in the country, there'll be less hiring. >> there'll be less hiring. >> in europe, he only spoke the last five minutes, that will be our next call. >> you're from new york? >> from boston. >> from boston. i will say forget about it, huh? >> and europe was -- we have nick on today, i saw him yesterday. he was pretty negative on europe as well. it seems like there's a lot going on. >> add it all up then. >> you know what, it feels to me -- >> sub 2%? >> i think it will be very strange here. i think you will see very strong housing. housing will drive employment. because 25% of unemployment was construction driven. i think you will see good

employment, unemployment better than we expect because of housing. i think the market will continue to be buoyant because the fed is forcing your hand to get into the market. the other thing that is a little strange because companies aren't seeing real organic growth and need it and made their efficiency gains over the five years, they will continue doing acquisitions. you will continue to see a good market. >> not encumbereded by a big bank. just say id. do these deals make sense to you? >> they make sense because the organic growth isn't there. when people have all this cash on hand, you have to do something with it. generally speaking over the last two decades, share buybacks are not a good thing for the stock. >> yesterday, saying 99% of all deals are lousy. >> he's looking at details. >> he was saying like home depot, when they put on the supp supplier business, they had to

get rid of it and doing much better when they got rid of things -- >> bankers make their money proposing deals and investing deals. >> we have a restructuring group, don't we? >> we talked about earlier, a nice housing market can counteract a multitude of since and you have the wealthy effect from the stock market of the fed. >> cramer called it the great gots gatsby market because the rich people are doing well. are we going to exacerbate the rich economy of the two differences again? >> it feels that way. it feels that bipartisan stuff we all want to happen is not going anywhere. >> also that people that the haves are going to continue to do well. austin didn't mention the obama-care tax or payroll tax or any of that. those are all headwinds, too.

>> listen, i think the impasse in washington is just crazy right now. i am absolutely for not having the sequestration. it's just too blunt of an object. >> but the two sides have not been able to -- >> zero. >> no common room -- common ground. >> if you could cut 85 you wanted to cut? >> in a nanosecond. >> do you have 85 you want to cut? >> do i know it off the top of my head. i think you need to still hit the revenue side. you need revenues and spending to be that fly% differential, you have to get there. you need revenues up by 18%. >> do you get that growing or additional taxes? >> i don't want to use the word taxes and i'm not trying to -- i don't think we're talking about tax rates here. there are certainly revenue loopholes we could be closing. >> we're supposed to close those to lower marginal rates. >> but we didn't. >> simpson-bowles we were lowering marginal rates and

closing loopholes. now, we raise annual rates and you close loopholes. >> it's important we don't have these blunt objects because we will never get to tax reform. >> simpson-bowles said 2.4 trillion, their new plan. >> i don't know the specifics on it. i need to go back through and take a look at it. >> they're less relevant now than probably -- >> i don't know. if they keep coming back, they could pick up traction. >> they had a chance to be relevant. >> let's take a break and we have you for the next two hours. our special stock summit continues and how executives are planning to keep their businesses successful. up next, small and mid-cap stocks. why you might want to kick the tires of carmax, speed up investment investments of technology. look for updates on twitter from andrew, joe and the

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welcome back, everybody. futures are basically flat lining after the markets closed at new highs yesterday. near half year highs for the s&p

500 and dow. and near 12 year highs for the dow and we will see how things move today. take a look at shares of garmin. the fourth quarter profit came in at 63 cents a share short of 73 cents and expectations came in short as the forecast for 2013. it is working to off-set a decline in the personal device industry when you have cell phones that can give you gps all over the place. the stock is down 5.7%. also, the famed oracle of omaha telling "squawk," there is still no better place to invest than in the u.s. >> america really is doing better than the rest of the world, which is everybody thinks we're lagging. i think from what i see, the u.s. is the strongest part of the world. >> along that vein, let's take a look at some domestic small and

mid cap names in the tech space that could provide pockets of opportunity. joining us the portfolio manager of a growth fund and of the needham aggressive growth fund up nearly 3% the past few years. good morning. >> good morning. >> let's go through a couple of your picks you think now have a little bit of opportunity. >> sure. al k al -- a key company for technology, akamai. they move data to consumers and enterprises. these same servers are used for security, a key element relevant to eastern european and chinese hacking of websites. >> where are you? i know apple is on your list of top 10 holdings. where are you on apple and more

specifically on this i hoeihorn issue in the news? >> we've been a long term holder of apple, seven years or so. we added to the position over time. we think it's a very inexpensive stock at six times enterprise value to earnings. on the eihorn issue, one of the main things we like at this point is their generation of cash and opportunity to return capital to shareholders. whether it is through david einhorn's initiative or other means, we think they can pay a higher dividend and buyback more stock and a recipe for success. >> i gather you think they can but will they? the ultimate issue on the table? >> we think they will. >> and car max is o list. >> car max, we think they're pockets of strength and a specialist retailer selling quality used cars in a great

setting, revolutionizing the way cars are sold. trades at a single digit multiple earnings of enterprise value to ebitda. they have hundreds of stores around the country and opportunity for growth with a share of that small market. >> what else do we have? integra. >> they are also pockets of strong spending. one is semiconductor manufacturing. and they are a maker of integration and control systems used in those next generation semiconductor plants, entegris. and double digit growth and traced at multiple digit to ebitda. >> we've been talking more broadly about the economy. i'm curious how you're viewing the idea of cap x and cap x spending given we have an up market yet the underlying

economy doesn't seem to be mo moving. >> our view is moderate low single digit of general petradp pockets of strength for semiconductor manufacturing and the other enables mobile and e-commerce. >> we will leave it there. john barr, thank you for joining us this morning. >> thank you. coming up, apple reporting something it hardly ever reports, a detail after the break and our exclusive stock summit. with jonathan craft and david wolf. and business expectations will all be covered. "squawk" will be right back. time now for today's aflac trivia question. which u.s. president was known for his early morning skinny dipping sessions in the potomac? the answer when cnbc "squawk box" continues. um, i see a duck.

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>> welcome back to "squawk." apple says a small number of its employees computers were hacked but no data exposed. the breach occurred when some employees visited a developer website and exploited a vulnerability in the java browser plug-in. it did not specify when the hack occurred. the company released a patch for its oxs users that can be installed from a security update. it appears to mirror a similar hack that occurred at facebook. it was very strange. they said some facebook employees had gone to see a developer and brought a couple computers with them and somehow during that meeting it happened. i don't know, you have a meeting, maybe there's people installing stuff on your computers. >> kind of creepy. >> kind of creepy. >> if you a commencemet on quess on anything you see on the show,

e-mail us. the futures have been barely bulging but coming after big gains yesterday. the dow was up about 53 points. the dow and subpoena subpoe&p 5 year highs. "squawk box" will be right back. when "squawk" returns, a special summit with business leaders who move markets. the ceo of haines celestial and kraft ceo jonathan kraft join guest host robert wolf to talk economy, business and prospects for the country. a special "squawk" summit only here on cnbc. profit from it. how do you keep an older car running like new? you ask a ford customer. when they tell you that you need your oil changed you got to bring it in. if your tires need to be rotated, you have to get that done as well. jackie, tell me why somebody should bring they're car here to the ford dealership for service instead of any one of those other places out there. they are going to take care of my car because this is where it came from. price is right no problem,

they make you feel like you're a family. get a synthetic blend oil change, tire rotation and much more, $29.95 after $10.00 rebate. if you take care of your car your car will take care of you.

we're about an hour away. following a december decline. we're looking for housing starts to drop to annual rate of 925,000 units for january after

954,000 in december. credit reporting agency transunion says late credit card payments up 9% in the fourth quarter compared to a year earlier. the average amount of debt for cardholders was down 1.6% from a year earlier to just over $5,000. right now, time for our special "squawk" summit talking about the growth of the economy from three different industries and where these guests see opportunity. our guest host is robert wolf of 32 advisors and the ceo of haines celestial and president of the kraft group and president of the new england patriots. welcome to the set. great to have you here along with our guest host. >> good morning. >> why don't we start out broadly and talk about where you see things right now. irwin, tell us what you're seeing in the economy and where things are shaping up. >> our sales are up 25%.

i guess eating healthy not a trend, a way of life. you are what you eat. and i was asked about the increase in fuel prices, how that affects you. listen, consumers will stay home. we're seeing good consumption. i looked at my walmart numbers yesterday from last week. we're still seeing good numbers at walmart. i love cold weather, love when it snows, they drink more tea, love flu season. love when you guys all had babies and talk about the baby rate being down 7% but still consumption of baby food. let's talk about walmart numbers. you get your numbers every week. there's been a huge scare thinking walmart had a terrible month of january or february kicking off, too. >> i saw numbers last week and our numbers looked good. the consumers are buying food. we saw tea numbers being very strong. we had a lot of storms around,

consumers buying products loading up. it's helpful. >> let me jump in for a second in the retail world. office max and office depot, 15.$15.30 a share and issuing common stock for each outstanding share of officemax. we can see how the stocks are transcending ahead of the news. we can say it's official. interesting they completed the deal yesterday and haven't put out a press release, put out an earnings release. odd there. >> buried in the earnings release? >> buried in the earnings release. a strange way to announce a transactions. >> is it like 2500 stores? >> 900 plus 1500. how many are left when it's all said and done out of 2,000? >> you give me a minute, i'll get back to you. >> no. we don't know the answer. i'm saying, i figure half.

>> debt consolidation. >> half. then who noknows, amazon and staples.com, i don't know. >> you guys sell anything to those guys. >> actually, we do. >> i was thinking, you might. >> we sell corrugated boxes to one of those guys as well as staples. we're staples guys. ron sergeant is the best. staples is a boston based company. >> good or bad for you or doesn't matter? >> probably doesn't matter in the scheme of things. i like it because it's good for staples and staples is where my heart is in that game. good from that perspective. >> jonathan, how is business overall? >> i'd say it's pretty mixed right now. in our industry of corrugated paper, you see a trend and 85% of the guys are up or going down. this is as mixed as we have ever seen it. really hard to draw specific conclusions other than some guys

are hurting and others doing okay. >> any way to distinguish who is and is not? different industries? >> i was looking yesterday. it is as bvaried as you can believe. we have a lot of food customers and the ones creating new products are growing share in a market i don't think is growing very much. but they're stealing share and their business is up and other guys are down. manufacturing, which is something that always moves together is as varied and mixed as we've ever seen it. we have a cutting tool company, they make saw blades basically for the consumer and industry. they're taking business back from china. they're closing factories and moving back here. their business is strong. we have a snow plow company that usually is incredibly busy this time of the year and running three days a week. they tell our guys their medium and small contractors, customers

usually buying replacement parts are trying to figure out how to spend the capital because they're not confident about the future. >> is that weather related because we haven't seen snow in many places? >> it really is. last year had less snow, business through the roof. small guys, my taxes going up, too much uncertainty, not going to invest capital dollars. >> guys bringing the blades back, why are they doing it? >> a combination of things. they have figured out -- first, energy in general, people like this country. they figured out how from a human capital perspective to mix human capital and hard capital goods to do it more effectively here especially when you take out the transportation costs. asia here with lower priced goods is now starting to make things less cost competitive over there and that's the reason. >> that's a big shift. >> it is. >> gentlemen, wry don't we try and throw our best ideas out. if you were looking at ways to

try and spur growth and get ways for help for business around the country, what do you think is the best things? this is a jump ball for anybody who wants to jump in first. >> like jonathan said, there's no such thing as the norm out there anymore. next week, there's a natural organic food show. we'll introduce 70 new products. innovation is key. to sit back today and say, hey, how do i get my business growing? we need more distribution. you see so much going on in the retail consolidation. you asked about amazon. three or four years ago, we did no business with amazon, they're my top five customers because you sit home and order diapers and baby food. >> all his stuff shows up in front of my house. >> and innovation, key customers, how do i gain distribution. we have just gone into europe and we subsequent half a billion dollars going into the uk. how many people told me i was

crazy going into the uk, why aren't you staying here, carl icahn being a big investor, we wanted to make sure we did the right thing for carl. we have taken those chances. >> has it paid off? >> it has paid off right for carl and we have a great relationship. >> and was it good when you went to the uk? >> absolutely. there's a lot of legroom and growth. from a. you can sit back and what i've done from the company starting it from scratch, half our sales are in the u.s., the other half outside the u.s. that's been the whole thing for myself, how i do 50/50. you will see a lot of consolidation in retail. there's 33,000 supermarkets out there. will see costco and whole foods go to 1,000 stores and trader joe's and amazon. you have to get behind the players that will grow. >> do you compete with herbal life? >> i do not competed with herbal

li li life. >> there is crazy stuff in here now to get that economy -- >> joe, i have to tell you, this is one of the hottest -- becky asked about -- >> that looks like it already -- >> the whole thing about drinking juices today, you go back about innovation. >> what is it? >> a juice product a cold press. >> 1, 2, 3 -- >> so people see what's going on here. >> what happened? >> a lot of consumers are going on a cleanse, which means you want a three, four day cleans, don't eat, zrirng juidrink juic pasteurized, contains kale spinach. this one contains six pounds of fruits and vegetables. you will feel great. >> you drink six of these a day. >> i feel like i'm on "pric "bridesmaid "bridesmaids." >> before you came on we were chatting and the economy stalling. you selling organic foods you

called say in some ways the fda may be benefitting your type of company. >> that has the great. herbal life and -- >> for real? whose side are you on there? >> let me come back and answer robert's question. every product we sell has a label. it's on the uda or fda controll controlled. in this country we had so many food recalls and we really have to. from a regulation standpoint, it's tough to do business in this country, it really is. being a public company, it is tough as a $2 billion company today, what we spend on being a public company, we could hire a lot of people. >> not pasteurized stuff, how do you make sure it doesn't make you sick? >> it goes through a new type of pasturization you're killing bugs and important to us. one thing about pasturization it

kills all the nutrients in the juice. >> are you going to do this? 1, 2, 3. >> andrew, it's a lot better than her to thing behind that can i won't mention you're drinking, and drinking that. you should not be drinking soda, andrew. >> i have to tell you. >> stick with the green stuff. >> it tastes good. i tasted some in back. it looks a little scary. >> it tastes great. a lot of sugar in it. >> a good sugar. >> good sugar. since when is there bad sugar. >> it's leaving your body, andrew, i promise you. >> it bothers me, robert, when you talk about regulation. >> we have to take a break. >> i love this guy but the affordable care act is doing more to kill small and medium sized business in this country than anything else. i think virtually everybody agreed health care needed to be reformed but virtually everybody would agree that congress was not the place to write that

bill. and to have congressman -- >> do you agree, irwin? >> by the way, irwin would like to have less regulation, too. becky asked where growth is coming from. we've been trying to buy small and 3450e7medium sized competitr years. in '09 and '10 they were shell-shocked, they're coming to us today saying, buy my company. we cabinet deal with this. >> we will take a break and continue after the break. yahoo! chief melissa meyer on nbc's "today" show talking about her ni website and competing for talent. details of that interview are just ahead. don't forget you can find "squawk box" online and on mobile, too. follow us on twitter at "squawk" cnbc. like us on facebook. visit our show page, "squawk box."cnb box."cnbc.com. ♪

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welcome back, everybody. take a look. futures indicated slower. dow futures down about 6 1/2 points and s&p 500 down 1 1/2 points. the deal is official. office depot is buying officemax in an all stock deal and each company will have directors on the deal. news was put into the fourth page of office depot's earnings release under the title "other matters." this slipped by. we were looking for other matters but they put it in earnings news. each of the stocks are up better than 10%. boeing has now found a way to fix battery problems on the boeing 787, increasing the space between the battery cells. they're telling reuters that the

gaps weren't wide enough. >> and there was criticism they were too close and the cells would overheat. >> it's only being reported by reuters at the moment and only citing one source. as people consider this news and think about what that means for the stock. >> it's been a muted reaction by the stock but indicated higher. >> understand what's going on there. in other news on boeing, the engineers are split on a contract. the latest professional proof, now members of a small technical union rejected it. both sides authorized the union to call a strike and they negotiated together but contracts are separate. talks are set to resume and no walk stoppage expected in the near term. looking into insider trading in the options of heinz. they had already filed a suit against an unknown trader who

used an account in switzerland to trade off purported inside knowledge. why is it possible it's an unknown trader to them? you would think the fdc could figure it out quickly. negotiations breaking down between alley financial and rescap. and makes it likely the company will have litigation. and toyota motors ramping up 10% in april. they are planning an increased due to higher than expected sales. when we come back, we will get additional thoughts from our special panel on growth. jonathan kraft, irwin simon, robert wolf. also an interview you can't afford to miss. meet the billionaire who sold and apartment in new york and house on a private island in miami opts for the simple life. he specialized buy iing trouble

companies and fixing them up. nicholas bergeron when "squawk box" comes right back. how do you keep an older car running like new? you ask a ford customer. when they tell you that you need your oil changed you got to bring it in. if your tires need to be rotated, you have to get that done as well. jackie, tell me why somebody should bring they're car here to the ford dealership for service instead of any one of those other places out there. they are going to take care of my car because this is where it came from. price is right no problem, they make you feel like you're a family. get a synthetic blend oil change, tire rotation and much more, $29.95 after $10.00 rebate. if you take care of your car your car will take care of you.

today is gonna be an important day for us. you ready? we wanna be our brother's keeper. what's number two we wanna do? bring it up to 90 decatherms. how bout ya, joe? let's go ahead and bring it online. attention on site, attention on site. now starting unit nine. some of the world's cleanest gas turbines are now powering some of america's biggest cities. siemens. answers.

we are meeting with president of the kraft group and president of the new england patriots as well, next year, jonathan. >> definitely. >> and ceo of hains, ceo robert

wolf is here and irwin simon. i don't know if i should take comment comments. >> eating healthy is not a fad. there are a lot of opportunities for weight loss and obesity in third world countries and mexico being one of the biggest markets right now, i think there's big opportunity for herbal life. >> i don't want to get too bogged down. >> as a ceo, i know you don't. i want to cut you slack. jonathan seemed to be saying regulation is an issue and obama-care is an issue but you're producing along with your company? you said innovation more important. you're no longer at a big bank making a payroll as ceo. suddenly you're worried more about regulation than you seem to be? >> i'm trying to keep under 15 employees somehow.

>> can innovation do it? companies need to deal with what the reality is. that's the reality. >> we now have more than 5,000 employees around the world. i remember when i said i want to keep under 15, it is what it is. it's a cost we have to deal with. we have done a great job managing our employee health plans and it will change a lot. as i sit back next year and see almonds and corn prices and commodities going up. i look at natural organic foods should only be 10, 15% higher than conventional foods. you're not going to pay more, becky is not going to pay more for products. andrew will, though, for baby food. >> i like preservatives. >> one of the big things is how we're taking more costs out. in the green room, jonathan and i were talking about, if you did all my boxes for me, how do i make a better box, cheaper and recyclable. a big thing in business, how are

we taking costs out of our business. every year we start on white pages how are we getting 30, $40 million of productivity out of packaging. every retailer are calling us, how are you shipping more efficiently and taking your conferences off. >> the thing bob is doing as a client. is he a client already? >> he is a client. >> you're helping with exports, imports, regulation and what was -- there was a fourth one. >> hopefully he doesn't see the fourth one, restructuring. he doesn't see that one. >> irwin is lucky, when you're in a consumer product business, you can innovate, you do it. we spend a lot of our time with basic manufacturing where historically in this country you have people that spent their whole life building companies that are today 10, 20, 30, 40, 50, $60 million, small medium sized companies like that, they are so discouraged.

i was starting to say before we went to the break. when '09 and '10 happened we thought it was a chance to buy some and they were holding out all hope and those people across all manufacturing industries, they're getting very discourage and very depressed. aside from things like the affordable care act that kills you in terms of costs and administrative time and regulation, they don't see growth, real growth in the economy the only way in the future they could grow their businesses. now they look at tax rates going up, they say, i have to invest money in capital to stay competitive, i'm going to get out. we now have people calling us who wouldn't even take our calls before. it's bad for america because when guys in their 50s, 60s, early 70s who were the heart of what we're about are getting discouraged and throwing in the towel we have a real problem. it won't discourage the kids in the dorm room, harvard, mit,

andrew was just talking about, will go out and employ entrepreneurs but it will discourage guys and bad for america. >> talking about the sequestration and resolution, it really puts tax reform off the table. one of the plans i think the whole business community wants if we get corporate tax reform a good chance for manufacturing goes to 25%, regular taxes go to 28%. it is really important we get through these ridiculous hurdles over the next 30 days so we can get corporate tax reform back on the table. manufacturing would start what we call it as in-sourcing, bring a lot back. >> it gets even more difficult the more you talk about closing additional loopholes, doing things one off piecemeal instead of overhaul of the entire system. >> idealistically speaking it would be great to say we're at 27% and up and down vote on every damn loophole but that's

never happening and you have to break up this pieces because corporate tax reform has to be done. >> it's called a ground game, not a -- ground game not a passing game? >> i don't see any grand bargain that will take this wholistically. >> as jonathan said before, one of the things we're seeing, here's a company started by two women grew to $25 million. hit the wall. couldn't take it to the next level. from a standpoint, you know, could i start an hains celestial group again where i created 5,000 jobs. a lot of small entrepreneurial companies -- >> getting bought up. >> as jonathan said before, we're seeing companies come to us in the organic industries in big multiples in valuations, there's an opportunity for us to buy them out saying i'm hitting the 30, 40, $50 million ceiling and there will be a lot of consolidation out there. the same with hain, if we don't

become a 4 or $5 billion company we will hit that ceiling, too. health care cost, how many jobs i can take out. >> you have to grow. >> i have to grow because of my costs. >> no disrespect to langone, we're talking acquisitions as a way of growth. >> i love ken langone and robert. ken langone is brilliant. joe, i'm sorry, i will let you ask your question. to me, unless robert's friend, mr. obama, decides that he really wants to see job creation in this country, which is going to come from doing the things we talked about, improving the government, it's not going to happen. >> are you glad the ravens won everything and gronkowski, i think you could have beat them. next year, we have to go. >> a great guy. >> when we come back. breaking economic news, read on the housing market and latest consumer price index.

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the homeless billion aaire moves from hotel to hotel in his gulf stream meeting with celebrities and big thinkers. he will join us on an cliff interview on the "squawk" set. breaking news that could move the markets. housing starts for january at 8:30 p.m. eastern. "squawk box" spring training. less than 40 days remaining for opening night and we talk to the executive vice president of the chicago white sox. a third hour of "squawk box" begins right now. welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with becky

quick. i thought andrew would be the empty seat after drinking that juice. how are you? >> i'm doing just fine. becky is in the newsroom. >> she's in the newsroom. i thought you were. he's here after drinking that. our guest host, robert wolf, ceo of 32 advisors, former chairman of ubs americas. more to come, but first - first -- becky! >> thank you, joe! >> i don't know where you are. >> i'm over here. have some juice, too. boeing is reportedly close to finding a solution to the dreamliner's battery problems, a source telling reuters the fix involves increasing the space between battery cells to fry and prevent overheating. and ceo brian moynihan was awarded a 72% pay increase to $12.2 million from $7 million. his base salary from 2013 is due to rise by over 55%. we've been talking about this,

this morning, major indices to rise at five year highs. everything is about flat lining, after big gains yesterday and a lot of questions about whether the market has really run too fast too far or whether stocks are fairly valued here. overseas in asia, you did see gains. the hang seng was up about .7 and nikkei up by .8 of a percent. you will see early tradeshows things going kind of like they are here. not too much movement. the biggest mover this is ftse up 25 points. >> thanks. among other stories we're following, the deal is official between office depoet a poepoep officemax. each company will have an equal number of directors on the new board. we should note it was put on the fourth page of office depot's

earnings release today under "other matters." we struggled to see if the news was crossing the tape this morning. so far, no separate news release. i don't know what to make of that. yahoo! ceo melissa meyer announcing a new look for the home page. in an exclusive interview with the "today" show, they will take advantage of personal habits of news feeds and we will take a look at the new design in a minute with cnbc jon fortt and cnbc has a partisanshnership wi yahoo!. dubbed the homeless billi billionaire, our next guest is an investor and philanthropist and focuses how to make the world's nations work better, young is now is nicholas, and

author for the 21st century. "intelligent governance for the 21st century." tell us, what is the underlying premise of the book? >> the idea that governance really counts besides culture, probably the biggest determinant in our lives this is way we are governed, one of those things that has america so successful they had high principles and the question is in a competitive world today, can it continue to adapt and reform. that's really the question. other places around the world have similar challenges and some rising, thanks to changes in governance. you look at china, they've made enormous progress the last 30 years, frankly thanks to a certain mode of governance and

the question is the premise of the book, can we in the west learn from practices in the east and vice-versa. >> are we failing now? >> well, it looks like we have become very partisan and that makes change harder. and change is needed. so we are not, let's say, ada adaptiadap adapting the way we should. >> i know that you remember another frenchman that loved the government here that wrote about it. are you headed that way or are you headed more towards a more activist government? >> well, the government is there to govern. once you elected any party or leadership, the leadership and the government should be at least for a period of time -- >> less can be more, if both sides agree less is more.

what unleashed those 200 years of exceptionlism, the government was there to let things happen, right, not to orchestrate the happening of those things. i'm just wondering where does your book take us? >> does it take us to more activist government or more activist people? >> i think a balance, in the sense that you need -- the will of the people has to be the determinant at the end. government is elected. once they're elected, let them do their job. let them do their job while in office instead of questioning and blocking it every time because if you do, then, you know, you don't have progress and you don't have decisiveness in a world that's become much much more competitive. >> nicholas, you travel around the world making investments. we talk about you as a homeless billionaire because you sold your apartment and don't have a

place you live i found fascinating to itself. how much these days does the role of government play in your investments? how much do all these issues we talked about whether debt ceiling or sequester or things going on in tax rates affect your decisions making investments these days? >> i invest very long term. in my mind, i have luckily a different view than short term view. there's no question that places that encourage investments in long term thinking will, you know, be friendlier to investors than -- if you look at china or india. >> have you made investments in china or india? >> i have. they're both very exciting places. india is a democracy, very vibrant but very difficult to get things done. china is not a democracy, quite opaque. so in that sense, quite scary.

on the other hand, you can make long term investment s and the environment is much more friendly in terms of being effectiv effective. >> go ahead. >> i had the great time yesterday with nicholas. we were just chatting for a while in his apartment and we aligned on a bunch of things. i thought it was interesting when he was looking at thei u.s he also thought there was a need for revenues and itemized deductions to be changed. >> rented apartment. >> rented apartment. sounds like you had an apartment. it's a rented apartment. he doesn't own the apartment. he's a homeless billionaire. >> actually, i'm in a hotel. >> it's an apartment. you're ruining our whole -- that it's like an apartment. >> like the size of my house. >> he also is quite negative on europe. was interesting when we were speaking today how it seems like the global growth is just so slow. part of getting the deficits

down is leaning on taxes. >> my own feeling is that the u.s., again, a question of balance. the u.s. share of gdp actually pays the lowest taxes of any advanced country but the u.s. has also big deficits. i think it's a question of meeting somewhere in the middle. tax rates for a modern economy in the u.s. will probably have to rise. on the other hand, the entit entitlements will probably have to be restructured and some what lower and you have to meet somewhere in the middle. ideologically today there's great resistance. in europe, you have a different issue. a system that has felt rated in the form of currency but doesn't have a financing mechanism to finance the currency. politically, europe is in a position where they can help the

whole and therefore can't help the individual economies. until that gets resolved, meaning there is more federalization of certain common goods like financing mec imis mechanism, until something like this gets done or breakup, i think europe will continue to -- >> which is a trickier problem? makes for better investing environment, problems with entitlements and revenue or problems with financing of the euro? >> the good news is that america historically has been more dynamic. you have positive immigration. you have one government. so at least if you need to make decisions, you have two parties. if you need to make decisions, the two parties come to some consensus, you can make it. in europe, it's that multiplied

by the number of countries considered. much harder in europe. >> chicken and egg. you look at gdp growth rates in the u.s. versus europe the last 30 years and we've grown probably 40% faster so our citizens have accrued 40% more wealthy. at the same time, our taxes were a lower percentage of our gdp. does that mean that the gdp growth was able to grow faster because our taxes were lower as a percentage of gdp or does it mean we need to come up to the same tasks as a percentage of gdp as europe, which has grown typically much slower than us? you see what i'm saying? is it good to aspire to higher taxes as a percentage of gdp? >> i think it's a question of social model at the end and societal model. more growth here but more inequality. in europe, i have the opposite. you have an comparitively generous welfare system, so the average actually- >> but they grew 40% slower

every year for 30 years. >> same in japan, lower growth but very high quality standard of living for the average. so in one case you sacrifice standards of living. >> the whole key. >> goes back to what you were saying. >> you talk about inequality. what is your take on that? you spent a lot of time. not only have you done very well but spent a lot of time with eric schmidt and other hedge fund managers have done very well. what is the ultimate answer for figuring that out or fixed if that is a problem you think is supposed to be addressed in all of this? >> you have to give opportunities to -- as many as possib possible -- especially if you're a rich society, like the u.s. or countries in europe, it's a question of giving the opportunities. opportunities aren't there, you're going to have continued inequality. a rich society should be able to afford to have much less

inequality and be able to -- this is the difficulty, should be able to adapt and o offer sort of modern jobs, which means very important investments in education and investments in things that are long term. that's harder in a very politicized environment. >> they need to invest in education and make sure we get our money's worth, that's the other thing, too. we need all kinds of -- we spend a lot and get nothing for it. >> what was interesting was your advocacy work, folks in california, you can get things done. i thought that was interesting why you thought california was different from most other states. >> california has the best and maybe the worst in the u.s. together. incredible. california is number one in technology, media, actually agricultural, at the same time, has a pretty high unemployment rate. so there's a lot going and a lot not going. the question is why the areas that are not going, how can you

help them? california, as a political system, is quite unique, whatever government cannot do, can be reformed by referendums. that's perverse, but that's one of the reasons why our institute has focused on bipartisan reforms in that state. >> nicholas, we have to leave it there. thank you for coming in. >> come back. the book called "the intelligent governance for the 21st century." we talked about it when i finished it. melissa meyer and yahoo!'s new home page. housing starts and producer price index for january. and spring training and deal making with the executive vice president of the chicago white sox. [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves...

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welcome back to "squawk." yahoo! ceo meyer unveiling a new home page show. >> it is her most important 340e789 since she became ceo

yahoo!. it's the most highly trafficked page. listen to how she described the home page this morning. >> it's more personalized and more dynamic. people said, give me a reason to come back to yahoo! today and the content is updated and refreshing and gives you the information you want and a few things that are nice and a bit of surprise. >> this design takes a few influences from facebook and twitter. it's got a news feed that automatically updates as you scroll down. nice button in the lower right hand corner you can click to get to the top of the page. this design is heavily influenced by smartphones. there are applications on the right side of the page for weather and finance. it's easy to repurpose that design to the smartphone and

tablet design. flickr

looking at things differently than a lot of people we talked to. we have talked to people who said housing is the best place to put it. he's putting his money into rental properties because he thinks you're in a situation where it's never going to be as popular to buy into this. maybe you buy your own house and not trying to flip houses like you were. >> i would say sam is possibly right. credit score is high. difficult to get a loan. it's up north of 700 to get a

loan. it's tough to get housing and refinancing and why people are continuing to rent. there's a nervousness. i think over the next two to five year period you will see investors come back in and you will see -- we have had no housing really build in the last three to five years. supply has diminished dramatically. we will see people say i want to put my money to work on housing, one of the best investments in this country. >> you look at particular ways to play that out aside from buying your own home, how would you advise investors? >> the stocks run dramatically, look at poltty, toll brothers, even ones that had to go through a tougher time, visa, all doing extremely well. that's one way to play in the home building sector. it's run quickly. the other way is you will probably have to look hat

investments whether collectively with other people buying houses and renting them out or, you know, maybe people look at their own house and decide it's time to upscale. >> robert, thank you. we will continue this conversation with robert wolf. >> i like that idea of upscaling. >> coming up, investors get key economic data points. we will bring you the numbers and market reaction. spring training is under way with just under a month until maj major league baseball's opening night. we will talk to white sox ken williams executive vice president and deal making in his office for the season in the back half of the hour. a new role. working behind the scenes to provide companies with services... like helping hr departments manage benefits and pensions for over 11 million employees. reducing document costs by up to 30%... and processing $421 billion dollars in accounts payables each year. helping thousands of companies simplify how work gets done.

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welcome back to "squawk box," everyone. sony is going to be holding an event today in which it is trying to out-do the playstation 4 expected some time between now and june. the playstation will offer the ability to stream games online. when we come back. economic numbers for housing starts and the price index for january. and the futures have been off all morning and s&p 500 down just under 1. with the spark cash card

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welcome back to "squawk box." we are about a minute away from housing starts and producer price index numbers for january. rick santelli is standing by at

the cme in chicago. economist jeffrey cleveland is joining us -- wow -- that's interesting, live all the way from los angeles. jeff, welcome. >> good morning. >> how are you? > steve liesman is in the studio and, steve, we were just talking to robert about housing. what should we look for? >> stepdown in housing starts. we had a pretty good month in december and we give it up in january and the question is whether or not it is seen as a trend with the numbers disappointing as well taking a one month drop when reported earlier this week. the other thing is ppi. that quill tick up in the headline with -- that will tick up in the headline with a lot of economists talking about ticking up of january in the index. >> here we go. housing starts 890,000. that is down 8 1/2% because last

month was 954, upgraded to 973, shifted down to 890. if we look at the permit side, last week upgraded and did improve to 925,000 to a neighborhood slightly less than 2%. producer price index for january up 1 -- sorry, teasing you, up .2 of 1%, strip out the all important food and energy, which has horsepower these days, also u up.2. some subtle revisions from last month's headlines, down.3. let's take a big view year-over-year, up 1.4, a bit light from last month. we look at core food and energy on year-over-year basis, up 1.8, higher than expecting but .2 cooler than our last look. let's summarize. inflation, these numbers never

make inflation look like a problem. you could be at the top of the mountain. if you have a reprieve, month over month but close to expectations. starts, will make some nervous after the national association of home builders market sentiment index yesterday, a couple points less than we were expecting. of course we will continue to monitor this. topic, housing, you guys were talking about it. that's all they talk about on this trading floor. i will tell you, when interest comes to housing, it's location location location. chicago isn't one of those cities that's burn burning in the housing market at the moment. very quickly, we're at a 2.03 yield. we haven't settled at that level, so this could be a new high going back to april. we link up to positives or negatives of equities and seem to recalibrate every couple of days and some what stuck in the zone. back to you guys. >> let's get back to steve

liesman and jeffrey, economist. do you have anything about what rick said before we go? >> big decline in northeast and midwest, perhaps weather related declines but cooling off from december. the ppi not much inflation going up the chain, in terms of less processed goods but some of that will change in february because the big decline was energy prices, specifically gasoline. i don't think you can make a case from ppi numbers that inflation is a problem. it's pretty good when it comes to profitability and input prices. >> you saw the housing numbers. just overall, where are we? where oil is? we're seeing mixed signals on exactly how strong we're going to be this quarter. >> i think in terms of housing, you have to keep in mind the recovery will progress in a see-saw type manner.

especially winter months, could be volatile, starts are down but doesn't mean renewed weakness, more of a weather related issue. i noticed the permits are up. permits should tend to lead starts. that's forward-looking as a forward-looking measure, better starting activity as we go into the new year. we're still at pretty depressed levels, in the scheme of things. if we're sub 100,000, 1 million at starts at annualized rate. still more of depressed environment. but if we do see this as a couple months of up and down seesaw type action and we move higher, i hope all my bullish friends get really excited. housing tends to, at least historically a great long leading indicator and should point toward better growth opportunities ahead. >> i have a long term chart of housing in the back. it shows if you go back to 1950, average annual housing starts

1.4 million. that's with the population we had throughout that entire period. obviously, the population has grown. that's our housing rebound, that little dogleg on the far rate there. that's what consider to be a housing rebound really quite anemic by itself. we're still below a million. it's a little bit hard to call it a real rebound. there's a lot of upside, wouldn't there be? i don't know what the right level is. it can't possibly be given the population growth we had in this country, can't possibly be where we are now. >> i would say it's the new normal. over the last five years, we were running at 300,000 for a period of time. we're now talking about a m million starts. we have come up from the lows progressively and pretty quickly. i think with respect to getting back to 2 million, that's assuming we will have almost 70% of this country own homes again.

most people thought that was a very high number. the question is what is the right number? is the mid 60s the right number? low 60s? i think right around a million permits, if you talk to home builders, they would be excited. >> do we have the balance sheet in this country given what happened to dodd-frank and qrm, do we have the balance sheet to provide loans to create the mortgages needed to make a million or million and a half new homes in this country. >> that's the missing ingredient. in the last cycle when we ran up, it was the credit impulse. as far as i can tell from looking at credit metrics, it's just not there. i think that's once in a generational type credit boom we saw. i don't anticipate that coming back. i do agree markets work, we just stop building houses and eventually, we'll need to build more, i don't think that's a boom situation that we get ourselves in, a question how long that takes timewise to get back to that 1.5 million level

on starts. >> there are three things hurting t hurting the consumer these days. the payroll tax increase, higher gas prices -- >> wait a minute, steve, wait a unit? . for the last three days. how do you know cause and effect. how do you know it's only the 2% payroll increases. maybe it's the tax increases on upper bracket and hiccup after the holidays. why is that the assumption for everything going wrong. >> i didn't finish what i was going to say. three things out there. payroll tax increases, income tax increases, higher gasoline prices. what i wanted to ask jeff about a fourth thing out there, ubs and the report said the real thing hurting consumers are late refunds. i wonder if you want to weigh in on the walmart memo that has everybody spooked and what's really happening with the consumer right now? >> i think you could make an argument the payroll taxes is taking a bite. at the end of the day, i think it's going to be job growth. you look at employment, the

population ratio, you don't see a recovery on that. you see a little bit of recovery on housing starts and building permits, but in terms of who is out there that wants and needs a job, that still remains not quite in recovery mode yet. that's a bigger driver of all sorts of other things we see, spending activity revenues into the federal government. that's a big movement. we need growth and employment growth. >> i'm reminded, jeff, i'm hearing from kevin, did you rent being there after your last appearance finally, and watch it and listen to chauncey gardner you were channeling about growth? andrew did not. did you do that, like you were assigned to do that and realize how funny that sound? >> professor joe, i did my homework, i found a ve very -- found it very funny. >> how great was it? peter sellers? >> it's great movie. great movie, great actor. i even watched the out-takes.

>> you tell raul -- do you remember that? >> joe, it's funny t, your particular humor requires the audience to have seen a given number of movies. what are other ones? >> "unforgiven." >> herbie herman's adventure. none of the new ones. >> must see. none of the new ones. >> joe, what was my key message that day? the u.s. economy. >> growth- >> gardening -- you need strong roots. >> what about the slap shot, joe? isn't "slap shot" on the list? >> "slap shot." >> good old-fashioned governmen government. >> rick, you had your anniversary yesterday. you're ready for a new one, i think, right? >> you know what, we're still fighting the old one. it's four years. in another four years, i have a

feeling we're still discussing the same issues. >> we'll see. you heard from a lot of people about affordable care before. when we see what i see -- i don't want to go back above 8% i really don't. i'm hoping that's not in the cards. who knows. >> it depends how you deal with people only working 30 hours a week. the market adjusts factor than the government can implement bonehead programs. >> thank you for playing along. andrew did not do it. thank you, rick and steve. >> i just saw the "shawshank redemption. >> that, i have seen. coming up, it is time for "squawk"'s spring training. we catch up with chicago white sox executive vice president ken williams as he helps his team get ready for the season.

how do you keep an older car running like new? you ask a ford customer. when they tell you that you need your oil changed you got to bring it in. if your tires need to be rotated, you have to get that done as well. jackie, tell me why somebody should bring they're car here to the ford dealership for service instead of any one of those other places out there. they are going to take care of my car because this is where it came from. price is right no problem, they make you feel like you're a family. get a synthetic blend oil change, tire rotation and much more, $29.95 after $10.00 rebate. if you take care of your car your car will take care of you.

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spring training has begun. there are many deals to be made ahead of the baseball season. joining us is ken williams on "t "the -- on the list of the 100

top black leaders. first, gm, you brought a world series to the white sox in 2005. you were a good center field, too, right? >> you know, defensively, yes. the people that ah me play would probably agree with that. then, you'd have to get into the discussion about the offensive side of the game. we will pass that. >> nobody wants to be offensive. a double star at stanford. you could have been a defensive back. your son is, any way? >> no. there is an interesting back story with that. i actually signed a professional baseball contract outigh school but then went to stanford and played football at stanford. i played wide receiver, returned kicks and punts. but interestingly enough, before one of my last college football game, a guy by the name of jack harbaugh, jim harbaugh andon to harbaugh's father-

>> the dad. >> exactly. came over to me and says, kenny, they're not using you enough on offense, you're playing defense. the next game. as a matter of fact, you're going to start. i thought he was nuts. by the time he got done talking with me, i not only believed that i could play the cornerback in that game, i believed i was going to make all pac-10 and go into the nfl as cornerback. he had that kind of enthusiasm. when i talked to my son, kyle, and asked him how jim -- what type of personality jim had, he said, dad, the way you're describing the father is the same as the son. it's not hard to see why that team did as well as they did. >> brothers. so we need to sequence that genome and maybe we can find a gene for that. amazing. last year, i saw what the sox's record was supposed to be and you almost did it in detroit. how will you do it this year?

>> it's too bad. we had a season last year and hired a new manager in robin ventura, a new coaching staff. they did a bang-up job motivating the players and getting them to play fundamentally sound baseball. for 118 games during the season, we were in first place. unfortunately, we couldn't -- we didn't match up well and didn't play well against some of the teams that ended in the bottom of the standings. that's where we lost to the division. we don't believe it was someone else won it as much as we lost it towards the end of the season. we hear a lot about the pr prognosticators out there and projections this year, where we'll finish. we have a tendency to grind it out and focus who we are and where we will be. usually, we're in a competitive situation and not conceding anything. we have good young players we

brought up last year that hopefully take that next step and make the whole summer exciting for chicago. >> with ticket sales and everything else, how do you gauge the economy right now? better than last year? tough? where are we? >> i think in different markets, you know, you will get a different answer depending where you are. it's hard for me to cry. we have a little bit over $100 million payroll. of course, you have to have the revenues to support that. in oakland and san diego and kansas city, you're looking at revenues half as much. that's another issue with regards to parity and all of that. i'm not going to complain too much. we don't draw as much as i'd like us to draw, obviously. we've got a fan base you need to prove that you're going to be an exciting team, you will be in contention and you have world series chance. otherwise, they're not going to

spend their discretionary dollar. on the other side of the town with the cubs, it's a little bit different. we have a fan base, we have to earn it. we start the season with that thought in mind. we work from there. we are aggressively trying to do as much for the fan experience. i think that's the key in sports these days, in any kind of entertainment these days, how are you going enhance the fan experience. once you start to do that, people will take notice and hopefully attend more games. >> hoping for an all midwest world series. the reds -- and some other team, i guess it could be the white sox. >> the reds -- yeah -- the reds are one of those teams that, you know, they -- the manageme management -- you can't say enough about teams that have little resources but their management team exceeds those resources, you know, and whatever the sport, exceeds

those resources and produces a quality product and the reds with dusty baker are one of those teams. i'd like to see an all chicago world series. >> okay. sure. right. that would 3450emean the cubs a the world series. what are the chances -- >> that's all right. >> appreciate it. hope to see you again. i love spring training. it means summer, boys of summer, all that stuff. appreciate it. don't forget to check out the rest of the grio 100 list at grio.com. when we come back, we will talk about stocks to watch ahead of the opening bell. jim cramer will join us for the new york stock exchange. are you ready for the stock of the day? it's coming up, right here on "squawk box." with fidelity's new options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options...

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welcome back to "squawk box" this morning. let's get down to the new york stock exchange where jim cramer joins us this morning. good morning. jim. >> good morning. >> we could talk about the office -- office depot and max care. suggesting they may have a fix for the battery. >> i think boeing has been

underestimated. this is a great american manufacturer. repeatedly we've heard it will take months and months. boeing's got one of the best engineering staff in the world and they'll come up with a fix. and it wouldn't shock me if this thing is back in the air in 90 days, maybe less than that. i think that's why boeing's not gotten hit. as far as the office depot, office max, i regard it as positive. the two companies getting together. when the staples deal was nixed in 1997, this might be a real player versus costco. >> we've had a couple of people on today, that, you know, robert is the president's favorite banker and everything. but he's saying we need to close these loopholes and do it not necessarily -- i guess you want to cut spending, too. you made a point in the past that we haven't done enough. >> there was a piece yesterday by speaker boehner, and i found

myself saying, yeah, like no kidding. i mean, how much more can we get? how much more progressive can the tax rates get? i would love to see the carried interest go away. those people are turning ordinary income into capital gains. you know, it's the spending side. how much do people think that we can afford? and i know we all realize that there's fat, in the military there's fat. i see they're going to cut the lowest end people. we've got too many generals. but honestly, this is a spending issue. >> just for clarity, i am absolutely not for rates going higher. okay? >> no, no. you want to do the loopholes. how about the mortgage deduction? >> i would not get rid of the mortgage deduction. >> housing is still -- >> no, i would not get rid of mortgage or charitable. i also would absolutely work on entitlement reform.

there's no question that -- >> bingo. making payroll nowadays. he's more or less now kind of -- he doesn't like regulations. >> i've always said we have to close the gap at about 3%. i liked it when it was 21 and 18, not 24 and 14. >> look, yesterday we had -- could those guys be more rational? yeah, you're really rational, but you're way out of whack with what we're doing. rationality is one of the lessons. you had the guy from the white sox, he should be running the country. he's got the payroll down, a chance at the world series. he played for stanford. you should be president. >> i've got to break in for one sec, jim, back to office depot and office max. this is crazy. they've now taken the press release down, according to people close to the transaction,

it was not supposed to go up. the deal has not been reached. >> what? what? are you kidding me? >> call up these stocks. they were both up more than 10%. >> it says the deal negotiations are ongoing, according to two people with knowledge of the matter. they were still attempting to finalize the agreement. several news organizations, including us obviously, quickly reported the terms. >> they were in the stupid press release. >> apparently this press release was put out prematurely, and now we're going to be waiting on word whether this transaction has been reached or not. >> as you're reporting this. >> remember when google issued arly and it turned out to be a great buying opportunity? >> are you worried about the boeing reports still, too, andrew? that was only a -- >> that was one source from reuters. >> boeing has a parking problem. the papers are incredible. >> anyway, we'll -- i'll try to figure out more during the

commercial break. >> you can't put the genie back in the bottle. robert wolf has been our guest host this morning. we'll give robert the last word when "squawk" comes right back. tomorrow on "squawk box," boone pickens. he'll join us for an hour to talk about the recent burst of m & a activity and the future for his natural gas plan. "squawk box" starts tomorrow at 6:00 a.m. eastern.

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